Setting Up Your Company in China: WFOE, Rep Office, or Joint Venture with Jason Zou

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Want to get started with opening a Chinese company? Today, we try our best to shed some light on various corporate structures Westerners have for opening a company in China thanks for tuning in to Global From Asia episode 70

Thank you everyone for tuning in today, I’ve been getting more and more requests about Mainland China business, and I am excited for this week’s show.

But first some news and updates – I was interviewed by Ally Mona of Limitless Laowai podcast, she has been cranking out shows like crazy, for expats in China to hear from others and get ideas. I shared about my China tech social media startup experience and the tough times I went through, if you’re curious I’ll link it on the show notes or you can go to
limitless laowai – http://limitlesslaowai.com/mikemichelini and listen to me spill my guts

Also, my friends at Shenzhen Party just released a book titled: Shenzhen The Book, and they let me give you guys the first chapter for free if you want to head on over to the show notes for today’s episode at globalfromasia.com/episode70 – I am so happy we have this ultimate guide about Shenzhen on the market now, great job guys!

Get Shenzhen The book preview now!

SO now onto the show, I am meeting more and more people coming to China for the first time to open their business and they are always so full of energy and excitement. Luckily the rules have gotten EASIER now, and we have Jason Zou from Beijing Bairui law firm to discuss different choices businesses and entrepreneurs have when opening a company. in China. I know this is going to be a top listened to podcast, and we hold nothing back.

And after the show I’ll go through some of my personal experiences with companies in China that I have done and how it has changed since I started, and also read off a 5 star review, so stay tuned after the interview

Topics Covered in this Episode

• Introduce Jason, we met at Wine and Cheese, thanks Brent for connecting us!
• What are the types of company structures a foreigner (non-Chinese) can open in China
• Does this also apply for Hong Kong ID holders and those in Taiwan?
• So let’s discuss each one:
• JV (Joint Venture)
• WFOE (Wholly Foreign Owned Entity)
• RO (Representative Office)
• Foreign invested partnership enterprise (New)
• So before for a WFOE there was a min capital required to be invested, when did that change?
• Also- that law was tested in Shenzhen first right, and then applied to other cities
• What are some of the restricted industries foreigners cannot do in China?
• I don’t want to get too political on the podcast, but can you share some reasons why these may be restricted?
• How about a VIE structure? Is that recognized in China?
• What are some legal tips for expats in China in 2015
• What kinds of services do you offer, and what are your rates?
• How can listeners reach out to you Jason?

People / Companies / Resources Mentioned in this Episode

• • I was interviewed on a Shanghai podcast about my China startup experiences limitlesslaowai.com/mikemichelini
  • Shenzhen party’s new book released titled: Shenzhen: The Book (on Amazon)
  • Get Free Sample Chapters to Shenzhen: The Book (see button below)
  • 4 kinds of business presences in China – (1) WFOE (2) Sino Foreign Joint Venture (JV) (3) Representative Office (RO) (4) Foreign invested partnership enterprise
  • March 1, 2014 – Amended company law took effect
  • Catalog for Restrictions in Foreign Investment – (I didn’t get the PDF, so here is the text list Jamie gave us: Providing commercial legal services and guide investment and resources for the following aspects: the export trade of consumer electronic products and accessories, clothing shoes and hats products processing production and export, OEM processing and export of other products, investment and set up factories, leasing plant, catering for investment, commodities import services
  • FETCO – Foreign Enterprise
  • Westerners employed in China must pay social insurance tax
  • Exit and Entry Administration Law
  • Contacting Jason Zou at Beijing Bairui Law Firm (shenzhen), mobile: 137 5119 4528; email: lawyerzrz@yahoo.com; wechat: szlegal2015;

Jason’s business website:
Shenzhen Commerce: www.shenzhencommerce.com; email: jamie @ shenzhencommerce.com

Episode Length 43:22

Thanks Jason for sharing so openly. Please everyone take the time to shoot Jason a thank you note for coming on today. He was learning what a podcast was, I had to explain it as an online radio, and what is really unfortunate is this podcast is blocked in Mainland China so he couldn’t listen to other shows to get an idea of how it would be – but I think he did a great job and I think it would be awesome if he got a bunch of thank you messages for being on the show he’d be so ecstatic.

Get Shenzhen The book preview now!

So I said i’d share some of my experience with a Chinese company setup, when I did my own in 2008, I opened a WFOE, and it cost me quite a bit more money than nowadays! Jeez, I thought I was getting in earlier and it would be cheaper! But I had a 100,000 RMB capital investment for a consulting and import export company, Shadstone Import and Export Shenzhen Company Limited – its still in operation to this day. And it is fully owned by my hong Kong company Shadstone Limited. I was first going to just open a Chinese company and own it personally as an American, but my lawyer (who I paid quite a bit to) did help out and told me to open a Hong Kong company first that would own the WFOE in China – and this helps a lot when owners change, as it only changes in the HK structure.

Others who have done rep offices eventually switch to WFOE, because it is a lot more hassle for a rep office, so I don’t advice a rep office honestly. You need to pay the government for each worker you have and then the government pays them, plus you need to pay tax on the costs of your china operation, not the income, so it totally sucks…..

But again, I may be wrong in some cases and maybe there are reasons to use a rep office….but I haven’t met those who told me so.

And now for our 5 star review – we have Chi from Hong Kong giving us a 5 star review, he has been a long time listener and I’m so happy he took the time to leave a review, so here it goes

Chi’s 5 star review

2015-01-20
5 stars
United Kingdom
By: Chi Wai Li
Must listen for anyone wanting to do biz in HK
What an insightful podcast on everything on running a business in Hong Kong. I was worried if I was getting ripped off for my company auditing, listening to the show gave me a much better idea of what costs what. Thank You Global From Asia!

So that is all I hve today folks, thanks for tuning in , I feel like i had a bit longer blah blah blah on the intro and recap today – but I think I kept it action packed. til next time!

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